The VIN News Service recently conducted a Q&A session with the American Veterinary Medical Association and its indemnity arm, the Group Health and Life Insurance Trust (AVMA-GHLIT). The discussion explores the controversial partnership that’s emerged between GHLIT and Pets Best Insurance, a private entity.

Veterinarians hoping that Public Service Loan Forgiveness might one day erase their student loan debt have until midnight, Eastern time to weigh in as the U.S. Department of Education creates the application system for those enrolled in the program.

More than 100 comments have been posted. Among them is the opinion of Dr. Janet Donlin, AVMA executive vice president and chief executive officer.

In a letter sent today on the AVMA's behalf, Donlin shared concerns raised by veterinarians and offered suggestions for improving the PSLF. Borrowers across many professions have criticized USDE's administration of PSLF, citing a lack of transparency and communication with potential applicants — problems that Donlin believes can be eased, in part, by streamlining and simplifying the program's application and certification processes.

Many veterinarians, she said, are counting on PSLF to ease their student loan burdens. As a result, the program helps steer practitioners into needy areas. "Early career veterinarians are more inclined to choose careers in public service — forgoing more lucrative careers in private practice — when they are able to manage their educational debt," she said. "The existence of the PSLF plays an important role in the decision-making process of veterinarians weighing career paths in public service following graduation."

PSLF is an attractive option for new veterinarians who graduate with, on average, $140,000 to $160,000 in student loan debt, depending on how it's calculated. Most enter their first jobs earning around half of that. Created in 2007 with the passage of the College Cost Reduction and Access Act, it is one of several programs designed to ease the burden of student loan debt. Under PSLF, the balance on federal Direct Loans is discharged for any borrower who makes 120 qualifying student loan payments while working full-time for an employer that's tax exempt under Internal Revenue Code 501(c)(3), a private not-for-profit that provides certain public services or a government organization. Veterinarians in AmeriCorps or Peace Corps positions also qualify. The student loan balance forgiven under PSLF is tax-exempt.

The first time a borrower may be eligible to receive forgiveness under PSLF is Oct. 1, 2017 — 10 years after the program was established.

It's uncertain how many borrowers will be among the program's first beneficiaries. USDE initially did not track borrowers planning to apply for forgiveness through the program, and for the first five years of its existence, borrowers had no way to know for certain whether their work and loans fell under PSLF stipulations. That changed in 2012, when USDE created a voluntary certification form to give borrowers a means to check with the agency to see whether they qualify and track their progress toward meeting PSLF requirements.

Since then, USDE reports rejecting 30 percent of certification forms it receives. Some borrowers are rejected because of the type of loans they have; USDE only accepts Direct Loans for the PSLF program. Others are rejected because their employers or their current repayment programs do not qualify, explained Dr. Tony Bartels, an expert on student loan financing with the Veterinary Information Network, an online community for the profession and parent of the VIN News Service.

As of June 2016, nearly 950,000 borrowers had submitted certification forms for PSLF, but just 432,000 borrowers demonstrated that they would qualify for forgiveness beginning in October 2017.

"It is unclear whether the Department of Education has a handle on, come October, how many people will qualify and whether they'll follow through and how expensive the first cohort of beneficiaries will be," said Gina Luke, assistant director of the AVMA Governmental Relations Division in Washington, D.C. "We don't know how many veterinarians are counting on this."

USDE has not released the demographics of those interested in PSLF. The AVMA, Luke said, is urging USDE to provide quarterly updates on who's using the program. "We would not expect or even ask for names of who's applying come October," she said, but the AVMA would like to see some basic information about enrollees.

"To better understand the demand and utilization of the program, applications should require borrowers to provide the name of their matriculating universities, employer, majors and degrees, gender and birthdate," Donlin wrote in the letter. That information, she said, should be included in a publicly searchable database, quarterly updated to track the amount of loan dollars scheduled to be forgiven each month, as well as the number of applications and certifications submitted and processed.

To collect and provide that kind of data, USDE must change PSLF forms to require that applicants provide more information about themselves. The AVMA also suggests rolling PSLF application and certification forms into a single document that can be electronically submitted to "speed up the process and make the system more efficient," Luke said.

"(USDE) could then send an automated response to the borrower letting them know their application and certification were received, are under review and are being processed," she added.

Borrowers also need guidance from USDE, particularly when their applications are rejected because their loans are ineligible, their form is incomplete or their employer does not meet PSLF requirements. In such cases, USDE should "describe the reasons why and provide the applicant with an opportunity to rectify those issues resulting in the rejection," Luke said.

Educate yourself about risks

Communication from USDE is important given the program's potential to financially harm borrowers who are rejected, Bartels said.

USDE's draft PSLF application states that borrowers will receive forbearance on their Direct Loans until USDE makes a final decision as to whether they're eligible for forgiveness. If the borrower is ineligible, the forbearance ends and USDE may capitalize — add to the loan's principal balance — any unpaid interest that accrued during that period.

Bartels opposes the forbearance stipulation because it penalizes rejected applicants: "If for some reason an applicant does not qualify when applying for forgiveness, having their unpaid interest capitalized could be devastating. Working toward PSLF for 10 years and making payments under income-driven repayment plans can result in tens of thousands of dollars of unpaid interest.

"Capitalizing that interest as a result of the forced forbearance period may add thousands of dollars to their repayment just for submitting the PSLF application," he added.

PSLF isn't for everyone. Those who want to use PSLF should educate themselves on qualifying loan types, repayment plans and employers, Bartels said. He recommends submitting PSLF employment certification forms at least annually. "You can mitigate the risks of qualifying for PSLF by knowing the requirements and checking in with the Department of Education regularly on your progress," he said.

While Luke is confident the administration of PSLF can improve, she worries about the program's future. Some speculate that Congress soon will undertake the process of reauthorizing the Higher Education Act, a broad statute that governs higher education and student loan programs such as PSLF.

USDE reports that the average debt of those eligible for PSLF is $60,000 and about 30 percent of enrollees carry balances in excess of $100,000. With PSLF anticipated to cost taxpayers billions of dollars in forgiven student aid, politicians in Washington, D.C., might push to cap the program, narrow its scope or eliminate it, which would be a blow to enrollees as they attempt to cash in 10 years of nonprofit work in exchange for debt relief.

"For our population, that includes [veterinarians who work at] shelters and, of course, folks who work for local, federal and state government," she said. "They're the ones using this program."

In the AVMA's letter, Donlin urged USDE to "take steps to maintain the PSLF and honor the 'contract' it has entered into with participants who have already dedicated years of their lives to careers in public service."

"Efforts to cap PSLF forgiveness will negatively impact veterinarians providing much-needed services to rural America's underserved areas, critical services in animal disease and surveillance activities as well as those practicing in shelter medicine and working to protect animal welfare," she wrote. "... Qualified employers need PSLF in their toolbox to compete for highly educated, highly skilled veterinary graduates."

VIN News Service commentaries are opinion pieces presenting insights, personal experiences and/or perspectives on topical issues by members of the veterinary community. To submit a commentary for consideration, email news@vin.com.